eFinancialCareers

In Part 1 of a two-part article, Amanda Lote of Profile Search & Selection looks at the key losers in Asia's new buy-side landscape. Her next column will highlight some glimmers of hope for hiring in this sector.

The last 12 months have been an historic time for financial services for all of the obvious headline-grabbing reasons and because of the profound impact that the loss of investor confidence and liquidity has had on the buy-side marketplace. In 2009 and beyond, the investment world will barely resemble its old self as redemption rushes and the impact of the global meltdown changes the asset management industry forever.

The most obvious victims have been the hedge funds and principal groups inside the investment banks. The fall of Lehman Brothers was a rude awakening to the nightmare implications of over-leverage. In the bull years of 2006 and 2007, principle groups had been growing in stature and importance, dabbling in a number of increasingly ambitious strategies. In the “good old days”, teams like ASSG (Asia Special Situations Group) at Goldman Sachs (and their rivals in all the top-tier firms) were lucrative prize-jewels, spinning huge profits for their host institutions.

By Christmas, however, the rush to disband these groups and get out of balance-sheet investing was total. Barely any of these teams has survived in their previous state. Goldman Sachs, Morgan Stanley and Merrill Lynch have all culled; either to satisfy the terms of their bailout preconditions, or to be transparently accountable to their unhappy shareholders. As a result the market is now flooded with candidates who are victims of this abrupt change in strategy.

Other than the “toxic” derivatives market, there is probably no other product base which has been so severely impacted by the meltdown. Individuals may try to reinvent themselves, or revert to their core i-banking skills, but in the current climate it is challenging for most people to reposition themselves quickly and to find new jobs.

The hedge fund losers have been very visible. For an industry whose ethos is built on opacity, this public vulnerability and exposure has been another surprising result of the credit crisis. In the early days of September, the short sellers were vilified by the press, but as the months rolled on, the short-selling ban left funds without hedging strategies, whilst simultaneously investors were clamoring to redeem.

One of the most high profile casualties in Asia appears to have been Citadel, which has wound down most of its Asia practice. Similarly many of its peers are exposed and are also downsizing, with 20-50% of their investment staff being asked to leave. Almost all of the headline-brand funds have been affected and some will ultimately be forced out of business.

Amanda Lote is a director at Profile Search & Selection.